C-Stores Need to 'Follow the Fringe'

"Change is slow until it's not," says consultant Sheahan

LAS VEGAS -- At the turn of the 20th century, the mayor of London called together a team of the best minds in the country to deal with the city's massive population growth. One of the team's conclusions lay in the area of transportation: It deduced that London would need one million more horses by 1925 to get people around.

Keep in mind that at the time of the meeting, there were already 78,000 automobiles on the road worldwide.

It is strategic tunnel vision such as this that Peter Sheahan, CEO of ChangeLabs, warned attendees against in the opening general session of the 2012 NACS Show in Las Vegas. Sheahan's firm is a New South Wales, Australia-based consultancy that works with clients such as Apple and IBM on large-scale behavioral-change initiatives. After much research into industries and companies that have thrived financially during periods of massive change, his firm deduced that this success came down to one key factor.

"People who make the most money make the best assumptions," said Sheahan. It is virtually never a brand-new technology or a competitor that knocks companies off course. "It is always something on the periphery that gets critical mass."

"Change is slow until it's not," said Sheahan, noting that headlines and stories on future developments are always present for a long period of time before the change actually takes place. The challenge for retailers is to adjust their "filter" of trends so it does not keep out developments with legs. Consider, for example, modern industry staples such as bottled water or energy drinks--both of which retailers may have scoffed at back in 1970 because they were making so much money from selling cigarettes and gasoline.

It is a phenomenon that the great Russian chess player Garry Kasparov called "the gravity of success." While the c-store industry may be recession-resistant, it should still "flirt with things in the fringe," Sheahan urged. "Be prepared to question your assumptions," he said, noting that with new possibilities come new filters.

Retailers should also envision how they may perform a different role in the mind of the customer--for example, as a serious option for food, alongside quick-serve restaurants. In Australia, McDonald's accomplished this feat when it began selling salads. The month following the product launch, the QSR was bringing back 350,000 customers who had stopped frequenting its sites for the past year. And perhaps most surprisingly--few of these customers ordered salad. Instead, this new category offering changed what McDonald's could mean in customers' lives.

"You have to actively change the story people tell themselves about the role you play in their lives," said Sheahan, with an emphasis on providing a high value. "Don't leave it to someone else to figure out how to deliver that value. He who gets critical mass first … wins."